Former congressman calls subsidies 'obstacle' to farm prosperity

Cal Dooley’s uncle might have been pleased, but it’s doubtful many Sun Belt row crop farmers would have been cheering the former California congressman’s remarks at the recent USDA Agricultural Outlook Forum.

Dooley, who served 14 years representing one of the San Joaquin Valley districts in California, threw down the gauntlet to producers who would like to roll over most of the provisions of the current law into the 2007 farm bill.

Turning the argument that 10 percent of farmers receive 70 percent of the farm bill’s subsidies on its head, Dooley noted that growers producing nearly 75 percent of the U.S. agricultural output today are doing so without those subsidies and “paying a price for our current farm policy.

“Allowing a minority of farmers in the United States to refuse to give up our archaic farm policies is holding hostage the 75 percent of U.S. agriculture that is willing to compete and win in the global marketplace,” he said, speaking at the annual USDA Forum Dinner.

Dooley, who left Congress in 2004 to become president and CEO of the Food Products Association, noted that he ran for his 20th District seat as a Democrat in an area that was heavily Republican.

“I often tell a story about my first campaign for Congress when I was trying to convince one of my Republican uncles to vote for me,” Dooley said. “After repeated efforts on my part, he finally said to me, ‘Cal, I have only voted for one Democrat in my life and that was when I was on a jury and I voted to hang him.’”

Row crop farmers – and several attended the dinner – might have shared those feelings when Dooley finished his speech at the Forum in Arlington, Va.

When Henry Wallace, secretary of Agriculture under President Roosevelt announced a new set of farm policies during the Depression, he called them a “temporary solution to deal with an emergency,” Dooley noted.

Still temporary

“While I will acknowledge there have been some modifications to our farm policy over the last 75 years, we are still utilizing a form of those temporary solutions.”

That begs the question: “Is our present farm policy designed for the age of globalization and are our policies assisting the maximum number of our farmers and rural residents to compete and win in the international marketplace?

“My answer is No, and I would challenge any leader in agriculture – whether in Congress or representing a commodity or agricultural organization: If they had a clean slate and were asked to design a new agricultural policy for the United States, would it look like what we have today?”

Dooley asked several rhetorical questions about what the new farm programs should encompass, including a litany of numbers that have become all too familiar to row crop farmers:

-- Would it provide 92 percent of crop subsidies to only five commodities: soybeans, cotton, corn, wheat and rice that make up less than 30 percent of agricultural revenue?

-- Would it direct those subsidies to only 30 percent of the farmers?

-- Would it allow 10 percent of farmers to receive 70 percent of the subsidies paid by taxpayers?

-- With more than 40 percent of farmland owned by absentee landowners, “would we design a policy that resulted in benefits being capitalized into land values, providing marginal benefit to farmers, while increasing costs of production, reducing our competitiveness and creating barriers to entry for young farmers?”

-- Would the Congress design a farm program that encouraged farmers to hope for lower prices? “An Iowa corn farmer was quoted recently in the New York Times, saying, ‘Everybody leans on the loan deficiency program as much as they can – it’s like opening up the federal Treasury,’” said Dooley. “There were quite a few people this year that wished the corn prices would go to zero because they would have a bigger LDP.

Want price decline?

“Can you imagine an apple grower in Washington, an almond grower in California, a cattle rancher in Texas, a peach grower in Georgia, a grape grower in New York saying they hoped the price of their commodity would decline or go to zero?”

-- Would we design a program that failed to contribute to rural prosperity? “A recent study by the Federal Reserve Bank of Kansas City found a negative correlation between the amount of farm payments rural counties receive and job and population growth,” said Dooley.

-- Would “we design a sugar or dairy program in a manner that actually impedes investment in the development and production of new products the marketplace is demanding or undermine the international competitiveness of U.S. food manufacturers?”

He said a recent U.S. Commerce Department report found the U.S. sugar program contributed to the loss of 10,000 jobs from 1997-2002 at companies that produce “sugar-rich” products. During the same period, employment grew by 30,000 jobs at food companies not heavily reliant on sugar.

“The same study found that our sugar program is driving up food prices, which is in effect taxing U.S. consumers $1.5 billion a year. Most objective parties would answer no to these questions.”

Dooley, a fourth generation farmer who grew up around Visalia, Calif., acknowledged that many farmers and some large farm organizations would like to extend the current farm bill for one or two more years until the Doha Round is completed.

Disingenuous

“This, for some, is a little disingenuous, as they also don’t want a Doha Round that forces the reduction of subsidies,” he said.

He also disagrees with U.S. agricultural leaders’ claims that reduced subsidies amounts to unilateral disarmament by the United States before it can win concessions granting more access to other countries’ markets.

“A compelling argument can be made that the U.S. should follow the lead of Australia and New Zealand, who unilaterally reformed their farm policies…with the result their farm policies today are more robust, competitive and their agricultural revenue is growing as a share of total GDP.” (Dooley did not address complaints that members of the Australian Wheat Board paid kickbacks to Saddam Hussein’s regime to increase its wheat exports to Iraq.)

“I look at unilateral disarmament as taking the program commodities weapon of choice, the shovel, out of their hands so they do not continue to dig U.S. agriculture into a deeper hole.”

Dooley said he wouldn’t be such an advocate for unilateral disarmament if the negative repercussions of our farm programs were limited to commodities that receive subsidies, “but farmers producing close to 75 percent of the agricultural output in the United States are competing today without subsidies and they are paying a price for our current farm policy.”

Failure to reform U.S. farm policies, he said, “Only further emboldens the European Union to continue their $60 billion a year Common Agricultural Policy and their export subsidies. It gives cover to Japan continuing their 500 percent tariff on rice imports; it facilitates Brazil and other developing countries from agreeing to provide greater access to U.S. products.

Exports dependent

“U.S. agriculture has always been and will continue to be dependent on exports and foreign markets,” Dooley noted. “We cannot lose sight of the fact that last year we exported almost $60 billion in agricultural production. As we look to the future, exports hold the key to U.S. agriculture’s financial prosperity.”

He said the United States can provide an appropriate safety net for its farmers, “a new toolbox” that allows farmers to manage risks while minimizing distortions in the marketplace. Among those: Whole farm revenue insurance and farm savings accounts.

The government also should plan a bigger role in assisting farmers to be on the leading edge of technology. “Investments in agricultural research are the key to enhancing productivity and creating new markets for commodities.”